Reform-The Uncertain Road Ahead

By Corrigan, Chris | Review - Institute of Public Affairs, December 2002 | Go to article overview

Reform-The Uncertain Road Ahead


Corrigan, Chris, Review - Institute of Public Affairs


RECENTLY it has become fashionable to say that people are suffering from reform fatigue, that there has been too much change inflicted on us, either by Governments or by globalization, or both, and that it's time to take a breather in the pursuit of world's best practice in Australia.

But the rest of the world is not going to stand still while we take a breather. Our exchange rate, for instance, is the scoreboard that determines how we are doing against the competition. We should be shocked to learn that, once, an Australian dollar would buy US$1.50. Today it buys about one-third of that. It used to buy more than 500 Yen. Today it buys 67 Yen-a 750 per cent adverse change. So we are not doing so well that we can afford to be complacent.

Tiredness is not a reason for us to stop the change process. Fear of the complexity, the obstacles and the consequences of change, however, might be the reasons for many to be reluctant.

Let me explain.

What happens when a business decides that it needs to change the way it does business, to enable it to survive in today's global marketplace? What obstacles are thrown up which discourage businesses from confronting head-on many of the structural problems which inhibit their performance and which very often condemn them to economic mediocrity?

Just look back to 1998 and the Patrick waterfront reform process. This illustrates just what is possible in a reform process and just how tough these obstacles are.

One approach to measuring waterfront productivity is the `net crane rate', that is, the number of containers moved per hour by one crane whilst it is working. The Federal Government had set a benchmark of 25 moves per hour as the target to bring Australia up to world standard. According to studies by the Bureau of Transport Economics, Port Botany in Sydney was running at a low 15 moves an hour in 1996. It had slipped pathetically to less than 14 moves by early 1998. It was slightly better up in Brisbane at Fishermen's Island at 16.

At the time, the maritime union argued that 25 moves an hour was an impossible dream. The ships were too small, they called at too many ports, the equipment was no good etc, etc.

In 1998, you could hear countless reasons why it was impossible to improve the waterfront ... the most laughable explanation being that it had already been reformed by the Hawke Government in their so called 'Reforms' of the early nineties! In fact, that was nothing more than a $450 million early retirement scheme for waterside workers, which we taxpayers funded.

But what was actually achieved? The respected Access Economics, in a report which examined the effects of waterfront reform on our export industries, recently reviewed the performance of Australia's ports in 2002. It spent most of this year investigating port performance, talking to port users, to exporters of meat, wool, cotton and dairy produce. It was able to claim that, `On virtually all measures in this study, Australia is at, close to or superior to world best practice'.

It should be added that many of those workers who so vehemently opposed the reform agenda are now earning as much or more than they were five years ago. Through a bonus system, linked directly to productivity, our best employees earn in excess of $100,000 per year. Most average around $75,000 a year.

So that's the good news. Much needed reform was achieved despite the most orchestrated and well organized union and political campaign of opposition ever marshalled in this country. But those were special circumstances. The waterfront was a national disgrace and Patrick was left with no other option but to tackle the problem head-on if it was to survive.

But what happens to small and medium-sized businesses without deep pockets? Let's assume we have a mythical CEO who decides he has no choice but to dramatically change the way he does businesses if he is to compete in the global marketplace. …

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